Reform of Jersey Law relating to security interests in movable property: White Paper

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A decision made 10 November 2011:

Decision Reference: MD-E-2011-0190

Decision Summary Title :

White Paper on the reform of Jersey law relating to security interest in movable property – Stage 2: extension to tangible movables

Date of Decision Summary:

November 2011

Decision Summary Author:

Director, Finance Industry Development

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

n/a

Written Report

Title :

White Paper on the reform of Jersey law relating to security interest in movable property – Stage 2: extension to tangible movables

Date of Written Report:

November 2011

Written Report Author:

Director, Finance Industry Development

Written Report :

Public or Exempt?

Public

Subject:

Reform of Jersey Law relating to security interests in movable property: white paper.

Decision(s):

The Minister approved the publication of the white paper concerning security interests in movable property and agreed that it should be presented to the States as part of a public consultation ending on Friday 13th January 2012.

Reason(s) for Decision:

The legal framework for securities in Jersey requires modernisation to provide Jersey with a simplified, modern and efficient legal regime for the creation, perfection, priority and enforcement of security interests. Given the scale of the change, it was decided to progress the reform in two stages: stage one to address security interests in intangible movables; and stage two, to extend this to cover security interests in tangible movables.

The first stage is almost complete, with the draft Security Interests (Jersey) Law 201- being approved by the States Assembly on 19th July 2011 and awaiting Privy Counsel approval. Therefore, it is now necessary to consult on stage two of reform.

Resource Implications:

There are no cost or manpower implications for the States.

Action required:

The Economic Development Department is to take such steps as are necessary for the White Paper to be published on the States website. The Greffier of the States is requested to arrange for the White Paper to be presented to the States.

Signature:

AJH Maclean

Position:

Minister for Economic Development

Date Signed:

Date of Decision (If different from Date Signed):

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Reform of Jersey Law relating to security interests in movable property: White Paper

MINISTER FOR ECONOMIC DEVELOPMENT

WHITE PAPER ON THE REFORM OF JERSEY LAW RELATING TO SECURITY INTEREST IN MOVABLE PROPERTY

Stage 2: Extension to tangible movables

1. Issue

1.1 The White Paper consults on proposed provisions regarding security interests in tangible movables.

1.2 This forms the second stage of the reform of Jersey law relating to security interests in tangible movable property. The first stage, addressing security interests in intangible movables, is almost complete following the approval of the draft Security Interests (Jersey) Law 201- (SIJL 1) by the States Assembly. The provisions set out in this White Paper would not constitute a separate, stand-alone law but would be integrated into SIJL 1.

1.3 There are no manpower implications for the States. There will be no additional cost implications for the States over and above those incurred in order to set up a Register for the operation of the regime under the SIJL 1.

2. Background

2.1 The legal framework for securities in Jersey requires modernisation to provide Jersey with a simplified, modern and efficient legal regime for the creation, perfection, priority and enforcement of security interests. Given the scale of the change, it was decided to progress the reform in two stages: stage one to address security interests in intangible movables; and stage two, to extend this to cover security interests in tangible movables.

2.2 Stage one has been taken forward with the adoption of SIJL 1 by the States Assembly on 19th July 2011. This will replace the existing Security Interests (Jersey) Law 1983 following the approval of the Privy Counsel.

2.3 This consultation sets out the proposals regarding stage two of reform. As per stage one, it follows the recommendations of one of the leading authorities in this field, Professor Sir Roy Goode QC. The provisions are based largely on elements of the latest security laws worldwide which are regarded as providing a successful and tested modern framework in this complex area, and have also been the subject of numerous judgments and substantial commentary.

2.4 The main changes proposed are:

● the extension of SIJL 1 to cover goods and the classification of goods;

● the insertion of a number of additional definitions;

● the expansion of the concept of “security interest” to cover:

sales with reservation of title; and
hire-purchase agreements, leases and consignments where securing payment or performance of an obligation, or where not, their treatment as security interests for all purposes except Part 7 (enforcement of security interests);

● the provision of additional rules on attachment and perfection;

● special rules relating to consumer goods; and

● new provisions on the priority of purchase money security interests.

3. Recommendation

3.1 It is recommended that the Minister approves the White Paper and that it should be published on the States website.

Director, Finance Industry Development